24th Nov 2016 08:54
LONDON (Alliance News) - Toy train maker Hornby PLC on Thursday reported a wider pretax loss in the first half of its financial year as it continues working on its turnaround plan, and hinted that it may have to raise prices following the UK's vote to leave the European Union.
The model train and collectibles group said its pretax loss in the six months to the end of September widened to GBP4.7 million from GBP4.5 million the year before, as revenue decreased to GBP21.9 million from GBP22.3 million.
Hornby said it is making progress with its turnaround plan by reducing business scale and costs to a profitable level, streamlining its European operating model and brands, refining its sales strategy and "substantially" exiting concessions, and carefully managing stock.
However, "much remains to be achieved" to restore the business back to profitability, Hornby said.
To make matters worse, Hornby noted that the depreciation of sterling following the UK's vote to leave the EU could have a "material effect" on its future results, as it purchases its goods in dollars which it then sells in dollars, euros and pounds.
Hornby said it hedges short-term exposures through forward currency purchases and forward contracts up to 12 months ahead, adding that it will seek to recover the increased purchasing costs through price increases.
"The group has traded steadily during the first half of the year but revenue is expected to decline significantly year on year in the second half as the planned rationalisation of product lines, channels and certain international brands takes effect. We remain confident of meeting the board's financial targets for this financial year," Chief Executive Steve Cooke said in a statement.
Shares in Hornby were trading down 5.7% at 29.48 pence on Thursday.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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